Seven beaches in the city's east - including Bondi - were shut to the public on Thursday as a major clean-up operation removed the balls and authorities scrambled to work out what they came from.
Along with Bondi Beach, Waverley Council closed Bronte and Tamarama, while Randwick Council has shut Coogee, Gordons Bay, Clovelly and parts of Maroubra.
Tests conducted by the NSW Environment Protection Authority confirmed the potentially hazardous material was a "hydrocarbon based pollutant, which is consistent with the makeup of tar balls".
Tar balls are formed when oil comes into contact with other debris and water - usually as a result of oil spills or seepage.
EPA executive director Stephen Beaman said there was likely a low threat to human safety and that the beaches could reopen within matter of days.
"Each time we get a tidal movement through the system, we're getting less and less balls along the beach, and so what we're recommending is we keep the clean-up operation going until it's completed," he said.
"It's a bit hypothetical at the moment to identify (and) predict where this material came from, but what we're actually doing at the moment is the chemical analysis so we understand the major material, and we'll use that to direct our further investigations."
Sydney University Civil Engineering head Stuart Khan said the limited number of affected beaches suggested the source could have been relatively close to shore, rather than an oil tanker out at sea.
They could even be the product of stormwater flowing out into the ocean, he said.
NSW Maritime has sent boats out but they found no tell-tale sheen on the water suggesting some sort of oil spill.
The dark-coloured balls were first found at Coogee on Tuesday and staff in orange Hazmat suits were still cleaning up the beach on Thursday.
Preliminary tests indicate the black spheres found at Coogee Beach were balls linked to oil. (Dan Himbrechts/AAP PHOTOS)
Randwick mayor Dylan Parker said community safety was the top priority and the beaches were closed as a precaution while the material was removed.
"We've had clean-up crews working at Coogee Beach. It looks pretty good but we're still waiting on the tides to come in in order to investigate," he said.
After closing Bondi on Thursday, Waverley mayor Will Nemesh said making sure people were safe was the priority.
"The wellbeing of our community is paramount ... that's why council has taken the precaution to close our beaches," he said.
Members of the public have been urged to avoid touching the material.
Premier Chris Minns promised that as soon as environmental officials knew the source of the pollution, the information would be shared with the public.
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