Abstract: The present invention is a method for monitoring contact levels of fluids in a subterranean oil reservoir. A monitoring wellbore is provided from an earthen surface into the oil reservoir which includes an oil zone, a water zone, and a gas zone, each having a level in the reservoir. The monitoring wellbore contains a plurality of fluids including an oil phase, a water phase and a gas phase, each have a level in the monitoring wellbore which substantially corresponds to the level of the oil, water and gas zones, respectively, in the reservoir proximal to the monitoring wellbore. The method includes positioning a transducer pair having a first and a second transducer in the oil phase of the monitoring wellbore, transmitting a plurality of first acoustic output signals from the first transducer in a first direction and transmitting a plurality of second acoustic output signals from the second transducer in a second direction.