What driving exercise tests the driver/operator's ability of reversing the direction of travel in a narrow street?

The correct choice is the confined space turnaround. This exercise specifically focuses on a driver's ability to navigate and reverse in a tight environment, which simulates situations that may be encountered in narrow streets. It requires precise control of the vehicle, as well as effective judgment of distances and angles, to successfully maneuver the vehicle in such limited space.

A confined space turnaround usually involves making a U-turn or similar maneuver in a space so restricted that it necessitates reversing multiple times to complete the turn. This exercise is critical for operators of larger vehicles, such as fire service apparatus, as they may often need to make such turns in urban areas that have limited room for operation.

In contrast, parallel parking is more about side-to-side maneuvering into a parking space, while a three-point turn emphasizes turning around in a narrow space but is less about reversing direction specifically. Obstacle avoidance focuses on navigating around objects rather than changing direction in a confined area. Thus, the confined space turnaround is the most relevant exercise for demonstrating the necessary skills for reversing in a narrow street scenario.