City needed a late equaliser by Samir Nasri to avoid defeat as they were held to a 2-2 draw at home by bottom club Sunderland, but Liverpool are now six points ahead having only played a single game more while Chelsea are four points in front.
Sunderland's survival chances remain slim but Connor Wickham's double - his first league goals for Sunderland since October 2011 - after Fernandinho had given City an early lead keeps their hopes alive.
Pellegrini blamed Sunday's defeat at Liverpool for affecting the players.
He said: "Of course the chances are less than before the match. It was very important for us to win the three points, for different reasons we couldn't but we continue fighting to the end.
"I think we couldn't take out of the mind the game against Liverpool and that was the consequence why the team didn't play well.
Pellegrini insisted however the players would keep going to the very end of the season - and pointed out they had come from six points behind to win the title in 2012.
"We have to play five games more so we continue having chances, less chances than before this game, but we continue having chances," he added.
"Remember this team two years ago were six points behind the leaders and they won the title at the end. So it is difficult - but it is not the last game we play today."
Pellegrini is right to keep believing but City's title chances really do appear to be in tatters. He referenced the title win in 2012 but the big difference this time is that there are two teams above them hunting for a title. You could always hold out hope of a slip up from Liverpool or Chelsea but to expect it from both sides seems unrealistic.
WHAT HAPPENS NEXT
City would love to right the wrong as soon as possible but instead they now have to wait until Monday night when they face West Bromwich Albion. By that stage Chelsea (v Sunderland at home) and Liverpool (v Norwich away) will both have played winnable games and could have put further distance between them and City.
WHAT THE MEDIA SAID
Oliver Kay (The Times): On this evidence, City will struggle to revive their challenge. While Sunderland were highly impressive, looking worthy of a point even before two goals in ten minutes from Connor Wickham took them from 1-0 down to 2-1 up late in the game, this was desperately poor from City. So imperious and scintillating in the middle period of the season, when they won 18 games out of 20 in all competitions, Manuel Pellegrini’s team have now won seven out of the past 15 matches, losing momentum and fluency when the stakes have been highest.
Paul Wilson (The Guardian): Don't be fooled by the entertainingly frantic last few minutes when Samir Nasri rescued a point, then fired too high with an opportunity for a last-gasp winner as City rekindled memories of the final day of 2011-12. For the most part this game brought to mind the City of 2012-13 – uncoordinated, ineffective and nowhere near the title.
WHAT THE FANS ARE SAYING
Mike (Eurosport Yahoo! user): It is now all over for Man City, I said right from the start of the season that either Man City of Chelsea will win the league, I cannot see anything stopping Chelsea now, and really Chelsea deserve to win the league. Sorry Liverpool, I like you, but you will crack like Man City. Pellegrini should start his shopping list now, Man City need to offload at least nine players from their squad, buy young boys that can play this football to blend with the experienced Man City players. Man City will surely be back next season.
Ryan Ives (Eurosport mobile app user): As a City fan of course I'm rooting for them to pull this around. I can't help the situation they have financially and the backing, that has happened in relatively recent years, but I am glad that if they don't win it, it seems like Liverpool will. They deserve it as does the ever present force that is Gerrard. He's a great ambassador for the sport and indeed the country, never a foul thing to say about anyone and of all in the people in the Premier League I'd say he deserves it the most hands down. I will still always root for City but ultimately it seems a good result wither way. Another cracking EPL season.
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