Abstract: Water sealed underground storage, an oil storage cavern artificially excavated taking advantage of the natural conditions of ground water, is the oil container consisting of the surrounding rocks and the fractured water stored herein. What is essential is to properly treat the rock fractures and then precisely predict the ground water level trend, so as to keep the oil stored in cavern below the ground water table within its service life, keep minimum displacement and level drop during drainage, and prevent the oil from percolating through the cavern. Taking the water sealed underground storage cavern in Huangdao as an example, the paper introduces the principle for the treatment of rock fractures and the new method for the prediction of water level trend, which are set up based on research on the characteristics of the fratured water, and which are superior to foreign correspondents. This principle is based on the integral rocks mainly consisting of capillary fractured water. The small amount of gravitational water controls the capillary fractured water, and the control of minimum displacement can be achieved by plugging the fractures containing gravitational water with cement. The capillary fractured water will result in strong water jump with great value during draining condition. The formula for predicting water level trend is presented according to the experimental results. The treatment and prediction are proved to be feasible and safe through the practice on the storage cavern in Huangdao.