The Victorian carded a bogey-free four-under par round of 68 at Lake Merced Golf Club, taking advantage of the afternoon conditions.

"It was cold and pretty windy out there and, because it's got a lot of elevation, it kind of swirls in the middle like in the low areas, so it was tough," Oh said.

"I hit the ball really solid today. Then the ones I missed, I made really good up-and-downs."

Oh was joined at the top of the leaderboard by fellow 21-year-old Lydia Ko, American Jessica Korda, Korean in-Kyung Kim and Caroline Hedwall of Sweden.

"This is a golf course where you need to drive the ball well and putt well," Ko, the Swinging Skirts LPGA Classic winner at the course in 2014 and 2015, said.

One shot adrift in a tie for sixth are Lexi Thompson, Sei Young Kim, Charley Hull and Celine Herbin after rounds of 69.

Next best of the Australians was Minjee Lee (70) in a big group tied for 10th while Hannah Green was one over after a 73.

Rebecca Artis (75) and Sarah Jane Smith (78) will need to improve in Friday's second round to make the cut.