Could/Should I cite a paper that I am refereeing? I'm reviewing the paper X related to the topic Y for a conference which is single-blind (in Computer Science). Also, I'm about to submit a paper to a different conference related to the same topic (single-blind). 

In fact, I noticed the paper X is a good recent work in the literature to which my paper belongs. However, it does not have the exact purpose as my work does, so I do not need to compare my results to those of paper X. 

Therefore, I like to cite paper X in the introduction of my paper, but I'm not sure if it is appropriate. Well, based on the quality of the paper X I expect it to be accepted (with 75% of confidence!), but would it be appropriate if I cite it as a submitted work, especially when it is not my work?
Reviewers obligations in general include respecting the confidentiality of peer review and not revealing any details of a manuscript or related communications, during or after the peer review process. Detailed for example in the COPE Ethical Guidelines for Peer Reviewers.

That said, by citing a confidential manuscript you reveal the title, potentially giving away a scientific message, and the authors, disclosing the fact they are working on a specific research question.

You can however cite a different version of the work in case it was previously published on a preprint server for example.