Only if you think of it in a physical sense. That 'streak' contains all the power of the blast in one point. It would reach further than a touch, because it has plenty of magical fuel to take it there. It would be no different from doing it in the air. It has no fuel when you throw it through the air. It's igniting the air because it's hot enough, in itself, to do so. In the water, same thing. Only, this time, it would likely manifest itself as a streak of heated water, or bubbles. Once it reaches the appointed spot, it explodes with the remaining energy, engulfing the area in superheated water that is flash boiled, and as you said, basically makes a gass bubble of superheated air.
A blow torch is only range of touch because it's creating it's own little area of oxygen. The magical fire doesn't need oxygen. It's magical fire.
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