Pep Guardiola says Manchester City's problem is that Liverpool are "possible the best team in the world" right now.
City beat Southampton on Sunday but back-to-back defeats in their previous two games have seen them fall seven points behind Premier League leaders Liverpool.
The top two in England meet on Thursday at the Etihad Stadium, in a game which could have huge consequences in the title race.
"They say we're out of the fight because we lost those two games," Guardiola said. "That we are candidates if he beat Liverpool... The only reality is that there are many games left.
"The problem is the other team is fantastic. [Liverpool are] maybe the best team in Europe or the world right now and in top form."
Jurgen Klopp's Liverpool side are unbeaten in the league this season and beat Arsenal 5-1 at the weekend.