Oil prices drop despite US-China trade optimism and record highs in US stocks

• Oil prices are trading in the red despite signs of a thawing in the US-China trade war. 
• Buyers are likely waiting on the sidelines ahead of the US inventory report. 

Oil prices on both sides of the Atlantic are flashing red despite the renewed optimism over US-China trade negotiations.

As of writing, Brent oil is trading at $61.22 per barrel, representing a 0.57% drop on the day. Meanwhile, a barrel of WTI is changing hands at $55.72, representing a 0.16% loss on the day.

US President Donald Trump said on Monday he expected to sign a significant part of the trade deal with China ahead of schedule. "We are looking probably to be ahead of schedule to sign a very big portion of the China deal, we’ll call it Phase One but it’s a very big portion,” he told reporters at Joint Base Andrews before leaving on a visit to Chicago.

Trump's comments bolstered the bullish action in the US stocks, pushing the S&P 500 index to a new record high of 3,044.08.

Even so, the black gold is trading under pressure in Asia, possibly due to expectations for a bearish US inventory report. Total US crude inventories are forecasted to have increased by around 700,000 barrels in the week ended Oct. 25, according to a Reuters poll of analysts, having unexpectedly fallen the previous week.

Meanwhile, stockpiles at Cushing, Oklahoma, the delivery point for WTI, are expected to have risen by about 1.5 million barrels in the week through Oct. 25, according to market intelligence firm Genscape.

The API is scheduled to release its data for the latest week at 2030 GMT on Tuesday, while the US government's Energy Information Administration releases inventory data is scheduled for release on Wednesday.

Brent technical levels