Velasco had a bogey-free round at the Santo da Serra Golf Club.
He was two shots in front of Tommy Fleetwood, Morten Orum Madsen, Magnus A. Carlsson, Joakim Lagergren, Oliver Wilson and Ben Parker.
Velasco has missed the cut in 17 of his last 21 stars on the European Tour, although he tied for ninth last month at the Sicilian Open.
Most of Europe's top stars are competing this week at The Players Championship in Florida.
2014: The Year in Music [PHOTOS]