Water vapour is a major factor in bending radio waves, causing ducting, for instance, due to sharp refractive index gradients. I don't know to what extent this applies to visible wavelengths.
I think it contributes the same relative amount, but light is bent less than radio waves.
Increasing water vapor would increase the refractive index. But the upwards bending of the light here is a result of a
decrease in the refractive index due the heating of the air reducing the density.
This page is about radio waves, but gives a fairly clear overview.
http://www.mike-willis.com/Tutorial/PF6.htm
I think with refraction it's a useful simplification to think about it of it as a function of
density, and the light bending towards the more dense air, like it the denser air is "pulling" the light towards it. (This is just an aid to remembering which way the light bends, there's not actually pulling involved)
Then you can see that normally air density decreases as you get higher, so the denser air closer to the ground "pulls" the light down, which is why we can see a bit over the horizon.
At constant pressure hot air is less dense than cold air, so when air is heated at ground level it becomes less dense, and so the cold air directly above it is more dense, so the light is "pulled" up towards the denser air.
Is it possible that the laser was pointed down and encountered some sort of 'inversion' near the surface of the water which caused it to 'curve up' and then follow the water surface? I'm out of my depth, here, and just guessing.
I said before this is not an inversion, as the temperature is still decreasing with height, however the
density actually increases briefly with height. So while it's not a temperature or pressure inversion, you could call it a density inversion.