SINGAPORE (Reuters) -Beaches on Singapore's Sentosa island were closed on Saturday after an oil spill spread from a nearby shipping terminal to the tourist haven south of the city-state.

A Reuters witness saw tape cordoning off the oil-stained waters and sand of Tanjong Beach from visitors.

"Oil slick spotted. Clean up in progress. Please stay clear of water," read a sign posted on the beach.

An advisory on the Sentosa website said the waters of Tanjong, Palawan and Siloso beaches were closed for cleaning and swimming and sea activities were not allowed.

The oil spill had spread from Pasir Panjang Terminal, less than 10 km (six miles) from the island popular with tourists and locals, after a Netherlands-flagged dredger struck a stationary Singapore-flagged bunker vessel on Friday afternoon.

The Maritime and Port Authority of Singapore said in a statement on Friday evening some oil from the damaged cargo tank on the bunker vessel had spilled into the water and "the affected cargo tank has been isolated and the spill contained".

In an update on Saturday, the authority said patches of oil were observed off Pasir Panjang Terminal and along Tanjong, Palawan, and Siloso beaches. It said it has deployed 16 oil spill response craft "to continue spraying oil dispersants and to collect the oil slicks on the water surface".

"There is no impact on navigational traffic. Berthing operations at Pasir Panjang Terminal remain unaffected," the authority said.

(Reporting by Xinghui Kok; Editing by Sam Holmes and William Mallard)