If you’re thinking about using pencil because you anticipate having to erase and re-write, you will be given a ton of space to fill in your answer. I used a pen (Uni-Ball Jetstream black, fine 0.7), had to cross out at times whole paragraphs and still had a ton of space left over. I never came remotely close to using all the given space for a problem.
If the instructions say pen, why would you even consider using pencil? I realize lots of people have used pencil in the past and pass no problem, but do you really want to make a call on what rules CFAI will enforce and which they’ll ignore on gameday after all your work?