In this paper, intensity distribution of 69.8 nm soft X-ray laser pumped by capillary discharge is studied theoretically and experimentally. In experiment, a main current of 11.5 kA is chosen to generate the plasma in a 35 cm long capillary filling with Ar at pressures in a range of 14-16 Pa. The intensity distribution is characterized by two different components. There is a big peak in the center of the intensity distribution profile, and its full width at half maximum divergence is about 0.4 mrad. There are also two small off-axis peaks on the either side of the center peak, and the peak-to-peak divergence is about 1.5 mrad. In theory, three different distributions of electron density are used to study the propagation of Ne-like Ar 69.8 nm laser in a cylindrical plasma column. The spatial intensity distribution for the 69.8 nm laser beam is calculated with the geometrical optics approximation. The results show that the center peak, which has such a small divergence, could be attributed to the slight depression of electron density on the axis.