At least 47 people were killed and 166 injured when a leak in an underground oil pipeline triggered an explosion in the eastern port of Qingdao.
The force of the blast ripped apart roads, leaving cracks up to 1.5 kilometres long, Xinhua said.
A photo posted on the internet taken by an airline passenger showed plumes of dark smoke rising through clouds over the city in Shandong province.
The Xinhua report comes an hour after Qingdao authorities raised the death toll on Saturday morning to 44, adding that rescue efforts were still ongoing. 65 of the injured were in serious condition, authorities said on Friday evening.
Caixin magazine reported online that at least six firemen died, citing a source close to Sinopec, which owns the 176-kilometre pipeline.
An initial investigation said a leak at an underground oil pipeline in the Huangdao district caused an oil spill contaminating an area of 1,000 square metres, the city government said. Some crude oil was collected by rainwater drainage channels and discharged into Jiaozhou Bay, causing a further oil spill covering 3,000 square metres of sea area.
But as workers fought to contain the spill at sea and fix the leaking underground pipeline inland, there was an explosion in both areas at 10.30am.
Qingdao authorities said late last night they believed the crude oil in the drains set off the explosion. Caixin said there was a series of blasts along the drainage network in the city.
Qingdao pipeline leak explosion
A man who gave his surname as Jiang, a resident in the road where the explosion took place, said cars in the street were damaged and all the windows in his apartment shattered. "The air smelled of gas," Jiang said.
Photos taken by other witnesses showed the injured lying in the road. "The street was like it had been cut open," he said.
China News Service reported that a bus passing by the junction was blown over and all the passengers on board were injured.
A rescuer at the scene told Xinhua he saw another bus stuck between huge cracks in the street while the passengers were trapped inside. "I've only seen this in a disaster film," he said.
The city's official news portal said hospitals were overwhelmed and were running out of beds for the injured. People living in the area were warned to avoid outdoor activities in the southern part of Huangdao because of the smoke and air pollution.
The Qingdao Environmental Protection Bureau said barriers had been set up to contain the oil slick as it spread into the sea.
The pipeline links oil depots in Huangdao to Weifang , which is home to several petrochemical plants.
Sinopec issued a statement online, offering its condolences to victims. "We will investigate the incident with responsibility and give timely reports," it said.
The central government has sent a team led by State Councillor Wang Yong, together with another team from the State Administration of Work Safety, to investigate the incident. The national health commission also sent a team of specialists.