The new measure is expected to target supplies of oil products to North Korea that are vital for military programs aimed at developing Pyongyang's nuclear strike capacity with advanced missile technology.
The new sanctions would be in response to the November 28 test of an intercontinental ballistic missile (ICBM) that flew 1,000 kilometers (620 miles) before splashing down in Japan's maritime economic exclusion zone.
Asked about the US-China negotiations, a council diplomat confirmed "there is definitely stuff going on" but said it was unclear whether China would agree to new sanctions targeting its Pyongyang ally.
A diplomat said the draft resolution could be circulated to the council this week, but others were skeptical that a deal could be reached so quickly.
In negotiations on previous sanctions, the United States has first agreed with China on provisions of each resolution before presenting the text to the full 15-member council, which has then quickly voted.
Since last year, North Korea has carried out a nuclear test - its sixth - and a series of advanced missile launches.
After the latest ICBM test, US Secretary of State Rex Tillerson called for "additional measures" against North Korea. And last week he told the council that the "pressure campaign must and will continue until denuclearization is achieved."
So far, the Security Council has imposed a full ban on supplies of condensates and natural gas liquids to North Korea, capped deliveries of refined oil products to two million barrels a year, and capped crude oil exports at current levels.
China supplies most of North Korea's crude.
The council has also banned exports of North Korean coal, iron, lead, textiles and seafood, restricted joint ventures and ended the hiring of North Korean workers abroad.
The United States has also asked the council to blacklist 10 ships, including two Hong Kong-flagged vessels, for carrying banned cargo from North Korea.
The UN sanctions committee has set a deadline of 3:00 pm (local time) Thursday for council members to raise any objections to a request to ban all 10 ships from ports worldwide.
Under UN resolutions, North Korea is barred from developing missiles and a nuclear weapons capability, but Pyongyang has argued that the arsenal is needed for self- defense against the "hostile" United States.
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