But he rallied to card a six-under round of 66 with three birdies and an eagle in his last five holes to sit at 13 under and is 7/1 - alongside Chesson Hadley and Tony Finau.
When seeking to defend the title he won past year, Brendan Steele returned to a club that helped him to victory at the 2016 Safeway Open-his Scotty Cameron by Titleist Futura X7 putter. Steele went on to birdie the 16th and 18th holes, with the latter sewing up his third PGA Tour victory.
Emiliano Grillo of Argentina and Graham DeLaet of Canada are at 11-under.
However, his surprising display at the par-5 16th at the Silverado Resort and Spa's North Course, provided a hilarious moment for those watching.
"I had a good time today", Mickelson said.
Steele had six birdies and a bogey in a 67.
"A little bit of everything worked for me today", Steele said.More news: Head, legs of missing Swedish journalist found
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"I'm not hitting it perfectly straight right now but (still) finding a way to get the job done right now", he said. This will be the last domestic event on the PGA Tour that offers full FedEx Cup points until Las Vegas the first week in November.
"I had seen the weather forecast for the whole week, that Sunday was going to be windy and it seems like Sunday's always the hardest day on the PGA Tour for whatever reason, the weather comes in". "I made 17 greens out there, left myself in some good spots, made a few of them and it was just kind of easy out there".
Hadley finished 12 strokes under par, tied with Phil Mickleson.
Brendan Steele reflects on defending his Safeway Open title in California.
Among the highlights of his round - which included 10 birdies, an eagle and a single dropped shot on the par-four sixth - was a 166-yard tee shot on the 15th to set up an eight-foot birdie putt.
Leader, Duncan, is playing his first PGA Tour event as a cardholder and after a strong opening round and an impressive start to round two he appeared to be losing his way early in the back nine with three consecutive bogeys. Emiliano Grillo (68) of Argentina, the victor in 2015, was tied for fifth place with Canada's Graham DeLaet (69) at 11 under par. Daly had missed the cuts in his past 12 PGA Tour events.