To answer your specific question, yes, you can use an ultrasonic sensor to measure fluid level. Mahendra's answer describes that. You mentioned that you feel that an ultrasonic sensor is the best solution, but I wanted to add make sure that you were aware of some of the other methods that are used to measure fluid levels.
This list of fluid level measuring techniques comes from an appropriately named website, "A Dozen Ways to Measure Fluid Level and How They Work".
- Sight Glass
- Hydrostatic Devices
- Load Cells
- Strain Gauges
- Magnetic Level Gauges
- Capacitance Transmitters
- Magnetostrictive Level Transmitters
- Ultrasonic Level Transmitters
- Laser Level Transmitters
- Radar Level Transmitters
There is no need to repeat the details of how each of these methods work, but this is a comprehensive list of technologies that could be considered.