Apologies to all, I meant to post the figure from NACA RM E6106 in the other thread, and when I didn't see it there I posted it a second time there not realizing it ended up here the first time I tried.
Anyway, maxc, my direct experience in compensating a spark ignited natural gas engine for ambient humidity is that, for excellent physical reasons, when no compensation is made for atmospheric humidity, power monotonically decreases with increasing specific humidity, from 0 on up as high as you like. There are two direct effects. One is, water vapour displaces other molecules in the atmosphere, in accordance with its concentration, which means less oxygen is available, by partial pressure, in proportion to water vapor that is present. The SAE net power correction formula takes this into account, so that power is corrected to the observed dry barometric pressure, i.e. the partial pressure of water vapour is subtracted out in the denominator of the correction factor, since the numerator assumes dry air (zero humidity). The above explanation pertains to an engine running at or rich of stoichiometry. The effect of humidity on an engine running lean of stoichiometry is more complicated and application specific, since since the effect of humidity is not the same for all methods that are used to control air/fuel ratio.
The second effect is a little more subtle, but also easy to understand. Water vapour in the charge acts as an inert diluent, effectively slowing the combustion rate and reducing peak temperature. This is exactly the same effect as EGR, for the same reason. With no change in operating conditions to compensate, slowing the combustion means it will be phased later in the cycle. Peak pressure, rate of pressure rise, heat release rate and effective expansion ratio will be reduced accordingly. The net energy release will be the same, but the energy is converted less efficently to pressure pushing down the piston; as a result, power correlates inversely with ambient humidity, assuming all control parameters are held constant.
"Schiefgehen will, was schiefgehen kann" - das Murphygesetz