webpagetest.org shows images not compressed.

use a different test, or use max lossy compression. They are recommending quality 50 (even though the quality level isn’t stored in the image, so they don’t even know for sure). tools.pingdom.com or the Google Pagespeed test are better if you’re only looking for lossless compression instead of maximum compression.

So focusing on the pagespeed results, as they make the optimize images a bit more obvious. They tell you compressing AND resizing, which is only half true. The real truth is that the images just need to be resized. They are being displayed at 120×120, but the actual images being loaded are much larger. Thanks to the srcset attribute that WP inserts, the damage isn’t as bad at 174×174, but that is still almost 50% of the image wasted. The fix depends on whether that 174×174 is actually appropriate for other areas of your site. If those is no other place on your site that displays images at a size between 120 and 174, then I would change the Media settings for that resize to 120 instead of 174.
If that isn’t one of the default sizes (thumbnail, medium, medium_large, or large), then you can use this plugin to introduce a new size at 120×120: https://wordpress.org/plugins/simple-image-sizes/

One you’ve got the dimensions fixed, then you will need to regenerate thumbnails for those images (using the Regenerate Thumbnails plugin naturally). That probably won’t satisfy pagespeed, but it will work pretty well. The tricky part is that image is displayed at a larger size when you click on that post, so you may not want to actually resize the image to 120×120. If you don’t mind it displaying at 120×120 in both places, then you can just resize it manually within WordPress, and update the featured image for each post.

Further reading here: https://ewww.io/2014/12/05/pagespeed-says-my-images-need-more-work/