Yes, you can. The question is whether you want to.
I think many writing guides suggest that sentences like that (the progressive in general) set up a scene, giving background information. So that sounds like you're telling a story and trying to make us picture the situation. It does not describe specific actions, but rather a general situation.
So I would imagine most likely that you would use that sentence either:
1) To introduce a story, sort of painting a picture of what was going on. And:
2) Probably at some point you would have a more punctual or even sudden event expressed with the simple past. For example "Then I had an idea!" or "Then I crashed the car!".