Rotate object with mouse

I'm trying to create a valve which can be turned by clicking on the valve and then moving your mouse in a circular motion. (like this without the snapping: https://youtu.be/sI7RFIdtw60?t=5m34s) The valve should be turned along the local axis since it will be attached onto a rotating object. I've searched on the internet but I can't find anything that explains me how to do this. Here is my code until now:

 using UnityEngine;
 using System.Collections;
 
 public class Object_Rot : MonoBehaviour
 {
     Plane plane;
     bool drag = false;
     Vector3 position;
     float distance;
 
     public float max_Z;
     public float max_Y;
     public bool open;
 
     void OnMouseDown()
     {
         // create the horizontal plane
         if (!open)
             plane = new Plane(transform.right, transform.position);
         drag = true; // start dragging
     }
 
 
     void OnMouseUp()
     {
         if (!open)
             if (transform.localPosition.z == max_Z && max_Z != 0)
             {
                 open = true;
             }
             else if (transform.localPosition.y == max_Y && max_Y != 0f)
             {
                 open = true;
             }
             else
             {
                 open = false;
             }
 
         drag = false;
     }
 
     void Update()
     {
         // if mouse button released, end dragging
         if (!open)
             if (drag)
             { // while drag is true, object follow the mouse pointer
                 Ray ray = Camera.main.ScreenPointToRay(Input.mousePosition);
                 ;
                 if (plane.Raycast(ray, out distance))
                 {
                     // transform the distance returned in a 3D point
                     Vector3 hitPoint = transform.parent.transform.InverseTransformPoint(ray.GetPoint(distance));
                     float z = Mathf.Clamp(hitPoint.z, 0, max_Z);
                     float y = Mathf.Clamp(hitPoint.y, 0, max_Y);
                     transform.LookAt(hitPoint);
                 }
             }
     }
 }