  We study the effect of dipolar interactions on the level of squeezing in
spin-1 Bose-Einstein condensates by using the single mode approximation. We
limit our consideration to the $\mathfrak{su}(2)$ Lie subalgebra spanned by
spin operators. The biaxial nature of dipolar interactions allows for dynamical
generation of spin-squeezed states in the system. We analyze the phase
portraits in the reduced mean-filed space in order to determine positions of
unstable fixed points. We calculate numerically spin squeezing parameter
showing that it is possible to reach the strongest squeezing set by the
two-axis countertwisting model. We partially explain scaling with the system
size by using the Gaussian approach and the frozen spin approximation.
