When above y = 128 (cloud level), clouds are displayed in front of water. I briefly looked over this. When you are looking through water with clouds behind the water, so long as there are no blocks behind the line of sight, the clouds are placed in front of the water. It is as though the water disappears in the one place where the clouds are. Screenshots attached.

*Note: In the screenshots, the ones with glowstone or other blocks nearby, are just for distance reference.