Petrowski: We've seen the bottom in crude

Bearish sentiment about the oil market resurfaced Monday after Iran dashed hopes for an output freeze in the near future, but that doesn't mean there should be expectations that crude prices will fall even further, said Joe Petrowski, founder of Mercantor Partners and a former CEO of Gulf Oil.

"We've seen the bottom for sure in crude," said Petrowski on CNBC's "Squawk on the Street" on Monday. "I think a lot of the oil companies realize crude was better on the balance sheet in the cheapest storage, which is the ground rather than pull it out and sell it."

There also have been other positive signs that oil prices should move higher, such as the pickup in driving by individuals and the trend of consumers buying bigger cars, he added.

Despite this outlook, U.S. crude on Monday settled down 3.4 percent to $37.18 a barrel, a drop of $1.32. It hit a three-month high of $39.02 on Friday, surging from a 12-year low of $26.05 a month earlier. Brent, the global benchmark, was down 1.8 percent, or 73 cents, to 39.66, in afternoon trading Monday.

Crude is not a growth business, Petrowski said. He believes investors should instead turn their attention to natural gas.

"I think the big story is natural gas. I think that still remains from an investor standpoint the place you ought to be," he said. "Natural gas is harder to shut off because basically natural gas, just the geology of production, means it's harder to shut in. We have tons of natural gas and that is a growth business."

Any fears that natural gas will be free in a few years are unfounded, Petrowski noted, because there are companies that are now working to switch trucks, fleets and even small cars to burning natural gas for fuel.

"Unlike oil, natural gas is developing new markets in transport, export and home power production."

— Reuters contributed to this report.