This is an example of hyperbole.
Nick is exaggerating how desolate and mournful the town is in response to Daisy leaving.
Painting car wheels black as a "mourning wreath" and a "persistent wail all night along the north shore" are hyperbolic descriptions meant to emphasize how much the town allegedly misses Daisy.
So the correct choice is:
O Hyperbole
The other options do not accurately describe the literary device used in that exchange.