There’s a new trillion-dollar question being asked on Wall Street: Is deflation a good thing for the market? Historically, the stock market has prospered in inflationary environments, but we’re in a unique situation because the strong U.S. dollar is causing commodity deflation.

Interestingly, when commodity prices fall, this typically sparks growth in emerging economies because when consumers spend less on food and energy, they tend to have more disposable income.

The chart below from Yardeni Research illustrates how falling commodity prices (blue line) have triggered growth in emerging markets (gray line):

So, I’d have to say that yes, the deflationary environment so far is a good thing for the market.

Nonetheless, Wall Street remains worried slumping global demand has caused the pullback in crude oil prices. The data, however, suggests otherwise. According to the latest industrial production surveys, economic growth is expanding in both China and the eurozone. So, global demand for crude oil is still growing.

In fact, the International Energy Agency predicted that worldwide crude oil demand will rise by 900,000 barrels a day in 2015. The truth of the matter is China’s GDP growth is slowing but is still growing over a 7% annual rate. And while the eurozone is stagnant, it has avoided slipping into a recession.

So, the oil markets aren’t experiencing a demand problem; instead, it’s the glut of crude oil that is depressing prices. This is due to a combination of seasonal forces and rising production from Iraq, Libya and the U.S.

The chart below shows just how much excess inventory there is right now (according to the U.S. Energy Information Administration).

Complicating matters further was that OPEC said in its latest monthly report that its crude oil production declined by 390,100 barrels a day to 30.05 million barrels in November, compared to October. Because crude oil inventories are rising while OPEC production declines, the downward pressure on crude oil prices will likely persist.

Overall, the EIA’s Weekly Petroleum Status Report is now going to be closely watched by Wall Street, while the price of crude oil remains under intense pressure from excessive inventories.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.